Insight

Why Trivago’s IPO might be undervalued

Trivago’s “aided awareness data”, showed surprisingly high awareness of the Trivago brand in the U.S. (63%) and even higher in Europe (79%-92%), their home territory.

Last week Trivago filed for IPO. Leading up to that, a lot of details on its performance was made public, and people in the financial and travel industries scrutinized that information to gauge the company’s value.

As others have pointed out, these figures appeared to contradict publicly available Google Trends data that appear to show Trivago trailing well behind brands like Expedia, Kayak and TripAdvisor, despite Trivago’s brand awareness data that puts them all about even.

In fact, their data makes complete sense and agrees with the Google Trends data.

Google Trends measures brand navigation, which is only a small part of how people click around on the internet. A massive number of people find sites like Booking.com and Trivago by searching, or by seeing them, on other metasearch sites or on travel marketing sites.

Trivago might seem like a minor player; but in reality, it’s important to understand how much traffic Kayak and Expedia get for flights, even though they both make most of their money on hotels.

People fly more frequently than they book hotel trips. The number of people who are typing in Expedia or Kayak for a hotel could be 20% or less of the people who navigate to those brands’ sites. This low-profitability flight-related traffic makes it impossible to compare Kayak with Trivago on an overall traffic level.

Imagine if Booking.com were judged entirely on brand recall and Google Trends data. If Trivago’s weak IPO showing was influenced by these misunderstood statistics, it’s a good buy.